The battle over bankers' bonuses

Philip Booth appears on the Financial Times to discuss the effect of capping bankers' bonuses.

The European parliament wants to cap bankers' bonuses to no more than a year’s fixed salary. Britain is firmly opposed to the plan but it is in the minority among EU states.

Mr Booth says that one possible consequence if bonuses are capped is that basic pay will be increased, which would make the banks more fragile. It would make it more difficult for banks to reduce their cost base and increase their capital.